But the Consumer Federation of America and the Center for Economic Justice let them know it’s not that simple in a letter to the insurance commissioners for all 50 states and Washington, D.C.

Your insurance premiums — home, auto, health… all of them — are calculated to include a provision for profit for the insurance company based on the after-tax rate of return.

The letter says insurance companies are legally required to lower those rates now that they will be earning more by paying lower taxes.

Each state regulates the insurance rates within their own borders. A department of insurance, or a similar body, monitors insurance rates to ensure they are not excessively high or low, or discriminatory.

Will state insurance commissions agree with the Consumer Federation of America and the Center for Economic Justice? We don’t know just yet.

The letter tells insurance commissioners that premiums should be lowered by approximately 5%. California’s commissioner has tasked his staff with reviewing rates to keep them within the legal parameters. So far, he’s the only state insurance commissioner to make a move.

Yes, You Can Negotiate Your Insurance Rates

If your state doesn’t put pressure on your insurer, you may be able to negotiate your rates yourself. Now that you know insurance companies are making extra profit — a lot of it — you may be able to use that knowledge to lower your premiums.

If your current company won’t do it, it may be time to shop around. The new laws may also allow competing companies to offer deals that are far better than what you saw a year ago. Don’t be afraid to tell your current insurer that you’re willing to jump ship and switch to a new company. This threat could be just the push your insurance company needs to cut your premiums now.

Don’t skimp on your coverage just to save money, though: Insurance is a godsend when you need it. You need the right level of insurance coverage, but why not pay as little as possible to get it? Those insurance company CEOs don’t need another yacht.

Tyler Omoth is a senior writer at The Penny Hoarder who loves soaking up the sun and finding creative ways to help others. Catch him on Twitter at @Tyomoth.

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